just parts 2 and 3 please

Part 2: Zero Curves and Mispricing Redux Suppose that you observe the following four bonds trading in the market. Bond Coupon Time-to-maturity Price A 5% 0.5 101.99 B 3% 1 101.49 4% 1.5 102.96 D 6% 2 109.82 Coupons are paid semi-annually. 1. Calculate zero-coupon yields for maturities of 0.5, 1, 1.5, and 2-years. 2. Calculate the discount factors that the zero-coupon yields imply. Do you see any potential problems? Why? 3. Suppose that you have a technology that allows you to store money for free (a "mat- tress) between years 1.5 and 2. That is, if you put $x under your mattress at t = 1.5, you will still have $x at t = 2. Construct a long-sholt trading strategy using the four bonds that earns you free money today, Hint: Start by replicating bond D with a portfolio of bonds A, B, and C, along with the Mattress Technology. In particular, 1 unit of the "mattress" technology has the following cash flows Mattress Technology Units t=0 t = 0.5 t=1 t = 1.5 t = 2 1 0 0 0 -1 +1 Part 2: Zero Curves and Mispricing Redux Suppose that you observe the following four bonds trading in the market. Bond Coupon Time-to-maturity Price A 5% 0.5 101.99 B 3% 1 101.49 4% 1.5 102.96 D 6% 2 109.82 Coupons are paid semi-annually. 1. Calculate zero-coupon yields for maturities of 0.5, 1, 1.5, and 2-years. 2. Calculate the discount factors that the zero-coupon yields imply. Do you see any potential problems? Why? 3. Suppose that you have a technology that allows you to store money for free (a "mat- tress) between years 1.5 and 2. That is, if you put $x under your mattress at t = 1.5, you will still have $x at t = 2. Construct a long-sholt trading strategy using the four bonds that earns you free money today, Hint: Start by replicating bond D with a portfolio of bonds A, B, and C, along with the Mattress Technology. In particular, 1 unit of the "mattress" technology has the following cash flows Mattress Technology Units t=0 t = 0.5 t=1 t = 1.5 t = 2 1 0 0 0 -1 +1